In our changing business environment we need new strategic reasons to exist

What does your company bring to the world? Companies and their CEOs often have clear visions of “what” they do: they know their products – names, features and functional benefits. However, they have more limited and inexplicit expressions of “why” they do what they do in today’s world. The “WHY” is the fundamental purpose of the company – the philosophy that drives the whole business.

For various reasons, (re)defining a company’s WHY is an unprecedented challenge. In unstable business conditions, with strong disruption and commoditization risks, new customers, and Gen Y employee behaviors, making your WHY crystal clear is the new key success factor to making strategy work.

Assuming a counterintuitive approach

What if… Apple did not exist? People mention the “iPhone” revolution as a key turning point in the company’s history. Apple actually benefits from a very consistent purpose, which was made explicit by Steve Jobs when he returned to Apple. Apple’s purpose is not about products and relating features. It is about humanity:” People with passion can change the world for the better,” Jobs said. Some companies have defined a strong WHY that ensures consistency and sustainability to their strategy. Jobs’ statement could appear theoretical, but it stands for a timeless strategic imperative for the whole company.

A company’s purpose falls into one of three categories which cannot be considered strictly equivalent: product, experience and reason to exist. Experience, particularly credo, is the most challenging kind of purpose to define, convey and embody.

Reason to exist is the heart of the WHY strategy approach: it is about the company’s meaning. It is the raison d’être of a company, the original and differentiating understanding of its role: making clear what the company brings to the world and what would be missing implicitly if the company disappeared.

Most companies’ mission statements lie in the products they sell, without defining the experiences they provide or, even less, the reasons to exist that they support. This is widespread: even management science has consistently focused first on “product”, and then on “experience steps”, rather than on a company’s purpose. Recent evidence from Arthur D. Little shows that this topic has been addressed 5,000 times less than strategy itself.

Because the power of purpose increases further with the reason to exist, companies need to define the raison d’être to create a “vertical strategic backbone”. And paradoxically, making their “WHY” clear allows companies to differentiate in terms of experience and product – through a cascading effect. Apple’s products give life to its cause, and everything it does tends to demonstrate its WHY. Apple’s differentiating purpose translates into brand attributes of products, consumers’ in-store experiences, relational strategy, internal culture, HR and management approach. Defining its “WHY” is not only a great and sane exercise. It is also a necessity for the company as a whole when it comes to facing business-environment challenges.